- Ninth Circuit Bankruptcy Appellate Panel Case Nos. EC-14-1195-PaJuKu and EC-14-1273-PaJuKu (June 12, 2015)
- In the unpublished ruling from the Ninth Circuit Bankruptcy Appellate Panel ("BAP"), the BAP affirmed the bankruptcy court on the basis that Charles Siller ("Siller") was the principal of the Debtor; therefore, acting as the debtor in possession during the time in which Big Hill Logging and Road Company, Inc. ("Big Hill") completed services post-petition. Thus the first criteria of an administrative expense claim was met by Siller's inducement of Big Hill to complete services post-petition. Big Hill's services directly benefited the Estate. Therefore, Big Hill was entitled to an administrative expense claim.
- Procedural context:
- Siller was the 100% owner of CWS Enterprises, Inc. ("Debtor") and appealed the bankruptcy court's order allowing a claim for administrative expenses for creditor Big Hill.
- The dispute is related to 180 acres of land owned by the Debtor in Oroville, California ("Property"). Prior to the Debtor acquiring the Property, it was a mining and dredging operation. During the time in which the Debtor owned the Property, "illegal dwellings" of transient people were set up throughout the Property. Additionally, as a result of the dredging there were large piles of tailing ranging from 10-30 feet high, over grown vegetation, and standing water that impeded access to the Property. The City issued a notice to the Debtor requiring that the Debtor clean up the property or it would pursue other "code enforcement actions." Debtor hired Big Hill to perform clean up the Property. Big Hill completed the services from February 7 to May 4, 2009, and the total charges for the services was $91,864.00. Sometime in early April 2009, a creditor obtained a judgment against the Debtor and the Debtor filed for Chapter 11 relief on April 10, 2009. Two of the Debtor's largest creditor requested a Chapter 11 Trustee be appointed. The Debtor and the Chapter 11 trustee were successful in confirming a Chapter 11 Plan, and the Chapter 11 Trustee (now Plan Administrator) paid administrative expense claims upon the effective date. The Plan provided for payment of all administrative expense claims, but did not set a cutoff date for filing those claims. The Plan Administrator filed a motion to pay Big Hill's full invoice amount, and the Court denied the same. Thereafter, Big Hill submitted an amended proof of claim asserting 80% of its claim was entitled to administrative expense classification. Big Hill subsequently sought approval of its amended proof of claim as an administrative expense. Siller opposed the same asserting that all executory contracts were rejected, effective as of the petition date, and Big Hill did not timely assert a proof of claim. The bankruptcy court allowed an administrative expense claim in the amount of 50% of the original invoiced amount.
- PAPPAS, JURY, and KURTZ, Bankruptcy Judges.
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2 Being Processed